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Unique Ideas to Increase Life Insurance Sales

Additional Uses for Life Insurance

additional uses for life insuranceLife insurance agents have several opportunities for marketing and income that are often overlooked. Hopefully, you exploit these additional uses for life insurance.

Some agents view their task too simply as selling a new policy.

But so many additional opportunities exist. I urge you to contact the advanced underwriting department of your life insurance carriers and ask about seminars or webinars. Seek education on the multitude of ways to use life insurance as a financial tool and not simply to pay a traditional death benefit.

Let’s look at three ideas in this post. (Please post your additional ideas for life insurance in the comments).

Term Life Policy Exchanges to Produce a Lost Tax Benefit

Say the insured has made $5000 premium payments for 20 years for term life insurance.  His tax basis in the policy is $100,000 and the cash value is zero (or minimally, the unearned premium for the current year).  If the insurance company will effect a 1035 exchange for a term policy to an annuity, it is a unique way to turn years of non-deductible premium payments into a tax shelter for an annuity.

The new annuity will have a tax basis of $100,000 (the sum of the 20 years of payments from the term policy used for the 1035 exchange), plus any new cash that the policyholder invests into an annuity. For this example, let’s say the policyholder puts $100,000 into the annuity.

His tax basis is now $200,000. IRS considers that $200,00 as a return of principal and does not tax it.  You have converted years of non-deductible term life payments into a tax “deduction.”

Focus on Financial Benefits, Not Death Benefits

I commend you for the difficult task of selling life insurance.  It is difficult because people do not want to think about death. It is also difficult because the purchase does not offer an answer to the insured of “what’s in it for me?”

For the insured looking at his own self-interest, there is no payoff in buying life insurance. Note: I know that plenty of life insurance is sold as a source of tax-free retirement income, but life insurance does not compete with other investments and that argument is beyond the scope of this post.

Only logical, practical or mature people readily buy life insurance for the death benefit.  For others, you may need to drag the prospect into the purchase for their family’s benefit.

Estate Planning for Non-Wealthy

Using life insurance for the payment of estate taxes applies to so few couples who have estates of $12 million-plus.  But there is an estate approach that applies to those of much lower net worth: those who simply want to treat their children equally.

Your approach is not “how to leave your children more money,” but rather “how to treat your children fairly and equally.”

The use of life insurance to provide liquidity for estate equalization applies to millions of people age 60+, people who want to treat heirs fairly and equally.

For example,  you can target people age 60+ who have lived in the same home for 20+ years. You can assume that many of these people plan to leave the family home to their children.

Leaving one property to multiple beneficiaries creates a disaster. Beneficiaries will squabble about dividing the asset.  Have you used this approach for direct mail, a seminar, or a webinar, “Why You Never Want to Leave Your Home to Your Children?” Life insurance is the only and obvious tool to create liquidity and avoid beneficiary fighting.

Targeting this older market has the additional benefit of targeting people who are wealthier than a younger typical life insurance buyer. Older people generally have more net worth and can afford larger premiums.

expand social securitySocial Security Continuation

Many agents are aware of using life insurance to replace pension payments when the pension recipient dies. While few people have pensions now, life insurance professionals can use the same idea with Social Security recipients.

There are powerful marketing messages you can use:

“How to Extend Social Security Payments After Death”

“How Married Couples Continue to Enjoy the Same Income After Losing Social Security When a Spouse Passes.”

“How Married Retired Couples Can Get Guaranteed Income Much Longer Into Retirement”

Do not assume that older people are not insurable. Each generation is healthier than the last generation at later ages. Seventy is the new fifty. You may need to find carriers who offer more competitive premiums for older insureds.

There are so many great uses for life insurance where it is the best tool to solve a specific financial problem. Look to learn a new use every week. What other less common uses can you suggest? Please post in the comments.

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